JOHANNESBURG - PAN African Resources, the JSE-and London-mid-tier gold producer, traded higher on the JSE on Friday after it announced that it had re-prioritised its capital programme after a study confirmed promising prospects of the two tailings projects owned by Mintails Mining.
Pan African, which agreed to acquire the liquidated Mintails’ Mogale Gold and Mintails SA Soweto Cluster last November, said on Friday that an independent fatal flaw and subsequent concept study into the assets had been positive.
The gold producer announced last year that it would pay up to R50 million for the Mintails tailings assets which were placed in provisional liquidation in 2018.
Pan African said the concept study showed that the initial phase of the project was likely to produce some 533 000 ounces of gold over a 12 year-life of mine at an all-in-sustaining cost of $800 (R11 167) an ounce.
The group said given the results of the concept study and the study into at 24 Level of the Evander mine, the development of its Egoli project would now be implemented in phases, with significantly lower upfront capital requirements, minimising the need of raising debt to fund the project in the coming years.
Chief executive Cobus Loots said the company planned to complete a pre-feasibility study into the Mintails project early in the third quarter of its 2021 financial year and if positive, a definitive feasibility study on the project in the first quarter of 2022.
“We have re-evaluated our capital expenditure priorities following the receipt of the positive Mintails concept study and the 24 Level project study, resulting in a more phased approach for the development of the Egoli project. This approach will extend the life of Evander 8 shaft and reduce our reliance on debt funding for Egoli’s development, enabling the group to maximise the value of our assets and also returns to our shareholder,” Loots said.
Pan African bumped up its 2021 guidance, saying it now expected to produce 195 000 ounces higher than the 190 000 ounces it forecast earlier.
The group also said it expected to maintain its production levels in 2022. The higher output was on the back of a better performance at Evander’s Shaft 8 pillar during the second half of the 2021 financial year and averaged 3 400 ounces a month during the last three months.
Pan African said the 8 Shaft pillar had a remaining life in excess of two years, and was expected to produce 80 000 ounces of gold during its remaining life of mine.
It said an internal investigation into the gold resources at 24 Level Project at Evander’s underground operations would extend Evander’s life of mine with a minimum of two-and-a-half years.